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US stocks drift lower with weak Chinese trade data renewing global growth concerns

Jan 14, 2019

 

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Market data as of 12:15pm EST

US Market Snapshot

  • US stocks are drifting lower midday as weak trade data from China is reigniting fears of a global growth slowdown
  • Chinese exports dropped 4.4% Y/Y while imports fell 7.6% Y/Y in December -- the worst results since CY2016 fueling worries about the impact of the ongoing trade dispute between the US and China on Chinese growth (and global growth) 
  • The S&P 500 is currently down 0.38%, Nasdaq Composite is down 0.7%, and Russell 2000 is down 0.7%
  • After its recent strong run, oil is retreating with WTI crude trading at $51.26, 0.64% lower
  • The partial US government shutdown is the longest in modern history and continues to weigh on investor sentiment 
  • JP Morgan speculates that the current cuts to oil production by OPEC+ is meant to create a USD$60/barrel floor for global oil  
  • Fundstrat’s Tom Lee argues that value stocks are poised to outperform growth stocks in CY2019 
  • Financials (+0.89%), Energy (-0.12%), and Industrials (-0.17%) stocks are the top performers in the S&P 500 today
  • Healthcare (-0.8%), Tech (-0.85%), and Utilities (-2.97%) stocks are the worst performers in the S&P 500 today
  • Investor sentiment for US stocks is negative with the advance/decline ratio for the S&P 500 currently at 0.58x
  • 139 stocks in the S&P500 are at 4-week highs while 2 stocks are at 4-week lows
  • 4 stocks in the S&P 500 are overbought while 2 stocks are oversold according to the 16-day RSI Measure
  • 85 stocks in the Nasdaq Composite are at 4-week highs while 16 stocks are at 4-week lows
  • 592 stocks in the Nasdaq Composite are overbought while 29 stocks are oversold according to the 16-day RSI Measure
  • The VIX is currently moving down at 19.14 from yesterday's close of 18.19

Stocks Trending in the News

Click name for Q-Factor rating and financials data.
 

  • Citigroup (C ) reported weak 4Q18 results, with fixed-income trading  revenue dropping 21% y/y to USD$1.94 billion while USD$2.4 billion was expected.  Citigroup’s largest trading unit saw its weakest revenue quarter since 2011.  Citigroup net income came at USD$4.3 billion, total revenue of USD$17.1 billion came below consensus of USD$17.5 billion.    CEO Michael Corbat said that after the volatile 4Q and its weak results, the main focus for 2019 will be to boost profitability.  Citigroup is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Delta Airlines (DAL) had its rating cut at Merrill Lynch to neutral from buy.   Merrill Lynch cut its Delta Airlines rating because it does not sees any near term earnings catalysts.   The near-term wind headwinds for Delta Airlines make it unlikely to see any margin expansion any time soon.  Delta Airlines’ price target was cut to USD$51 from USD$62.  Delta Airlines is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas. 
  • Embraer (ERJ) said part of the proceeds from the sale of its commercial aviation business to Boeing (BA) will be paid as a special dividend.  Embraer expects to yield ~US$3 billion from the sale, net of transaction costs.  Embraer has not decided how much of the USD$3 billion will be paid as a dividend and how much will be retained as working capital.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.  Boeing is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • MNG Enterprises has offered to buy Gannett Corp (GCI) for USD$1.36 billion.  MNG Enterprises is offering USD$12 per share, a 23% premium to Friday’s close.  MNG Enterprises owns over 90 newspapers and is looking to add scale to its operations.  Gannett is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Gymboree (GYMB) is close to a bankruptcy filing, according to the Wall Street Journal.  Gymboree is lining up bankruptcy financing in anticipation of a filing, the paper is reporting.  Gymboree will close all of its 900 stores, it is being reported.  Gymboree is not rated in our Global Top Stock Ideas.
  • Lululemon (LULU) increased guidance for fourth quarter results.  Lululemon said fourth quarter comparable-store sales grew in the high-single to low double-digits.  Lululemon also expects total sales and adjusted profit to both come above previous guidance.  Lululemon expects total sales of US$1.14-1.15 billion in the quarter that ends February 3rd.  Lululemon is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Newmont Gold (NEM) will acquire its rival Goldcorp (TSX: G) in a USD$10 billion deal.  The deal will create a gold mining behemoth.  A statement from Newmont Gold said, “The combination will create the world’s leading gold business.”   The combination of Newmont Gold and Goldcorp will be a company producing 7.9 million ounces of gold per year.  Goldcorp is rated “Top Short” in our Canada All Cap Global Top Stock Ideas.  Newmont Gold is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas. 
  • Northrop Grumman (NOC) was upgraded to outperform from neutral by Credit Suisse today.  Credit Suisse sees improving margins this year and cited this as a reason for the upgrade.  Northrop Grumman should see organic sales growth 2-3% in the coming quarter.  Northrop Grumman is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • PG&E(PCG) has informed employees it will seek bankruptcy protection on or about January 29th.  PG&E must inform with a 15-day notice which it is doing.  PG&E’s CEO quit over the weekend and its CFO will take over for now.  PG&E is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Snap (SNAP) was upgraded today at Citi to neutral from sell with a USD$7 reiterated.  Citi sees growth potential and an attractive valuation and cited both in its upgrade.  Snap will introduce an upgrade to its app shortly and that should improve user engagement, the report highlights.  Snap is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • Western Digital (WDC) was downgraded today by Evercore ISI to underperform from in-line.  Evercore ISI also cut its price target to USD$30 from USD$35.  Evercore sees risk to its dividend with its USD$11 billion debt load, saying Western Digital would be “hard pressed” to maintain its dividend at current levels, if at all.  Western Digital is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Top Stock Ideas.
  • Viacom (VIAB) is in talks to sell a majority stake in its China operations, according to a report in Bloomberg today.  Viacom is in talks with a Chinese entity to purchase the stake, without citing the potential buyer.  The sale talk comes as Viacom struggles to scale its operations in China.  Viacom is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • XPO Logistics (XPO) was downgraded by KeyBanc to sector weight from overweight.  KeyBanc cited the increased competition in the last mile of deliveries as well as continuing uncertainty in Europe in its downgrade of XPO.  XPO Logistics is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
     

 

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US Treasuries

  • US 2-Year Treasury Notes are higher with yields down -0.61 basis points to 2.53%
  • US 5-Year Treasury Bonds are higher with yields down -0.34 basis points to 2.52%
  • US 10-Year Treasury Bonds are lower with yields up 0.35 basis points to 2.70%
  • The US Treasury 2s-5s Spread has widened 0.27 basis points to -0.01%
  • The US Treasury 2s-10s Spread has widened 0.96 basis points to 0.17%
  • US Treasury 5s-10s Spread has widened 0.69 basis points to 0.18%

Currencies

  • EUR€ is currently little changed against the USD$ at 1.1477
  • GBP£ is currently up 0.335% against the USD$ to 1.2887
  • CHF is currently up 0.305% against the USD$ to 1.0198
  • JPY¥ is currently down 0.24% against the USD$ to 108.22

Commodities

  • WTI Crude is currently down -0.64% to USD$51.26/bbl with the Brent-WTI spread down USD$-0.56 to USD$7.83/bbl
  • Gold is currently little changed 0.05% to USD$1290.9/oz

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

S&P 500 Sector ETFs - Intraday

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

Russell 1000 Factor ETFs - Intraday

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

 

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S&P 500 Movers

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Outperformers Sector Price 1D % Chg Volume
PG&E Corp Information Technology 23.6 -47.36%            6,341,627
Newmont Mining Corp Information Technology 35 -9.09%            2,211,487
Western Digital Corp Real Estate 36.9 -6.10%            2,444,004
Wynn Resorts Ltd Health Care 98.1 -4.34%                472,450
Micron Technology Inc Consumer Staples 31.9 -3.75%            4,409,146
 
Underperformers Sector Price 1D % Chg Volume
Citigroup Inc Materials 51.8 4.15%            4,458,680
State Street Corp Utilities 63.2 2.70%                167,924
Cimarex Energy Co Information Technology 62 2.45%                  89,360
Ford Motor Co Consumer Staples 7.85 2.21%            3,903,656
Best Buy Co Inc Financials 52 2.05%                213,506

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